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Bob Elliot: Gold the Excellent Risk Diversifier that is Widely Underheld

Tom welcomes Bob Elliot to the show he is CEO & CIO of Unlimited Funds.

Bob Elliot discussed the current economic situation, the role of debt cycles, and the trade-offs between a fiat monetary system and a commodity-based system. He noted that productivity is the main driver of growth over the long term, and that debt cycles have been used to make up for declining productivity. He explained the risks associated with governments borrowing to make up for productivity declines and noted that wage growth is maintaining nominal spending at a higher level.

Bob also discussed the Great Depression and Japan’s deflationary trap, arguing that the US has been more successful in responding to deflationary forces due to their policy mix.

He also argued that the Federal Reserve should be agile in responding to data rather than predicting what will happen and mentioned gold as a great diversifying asset to protect against tail risks.

Timestamp References:
0:00 – Introduction
1:10 – Our Economic State
4:01 – Demographics & Labor
11:14 – Wage Growth & Inflation
16:38 – Limits to Debt Growth
23:08 – Destabilizing Effects?
27:20 – Recessions & Deleveraging
31:03 – Great Depression Response
35:30 – Japanese Debt Levels
40:04 – U.S. Immigration & GDP
43:43 – Perpetual Growth?
46:27 – Fed Policy & Response
49:34 – Hiking Cycle & Effects
52:40 – Risk & Open Mindedness
56:07 – Gold & Going Defensive
59:04 – Wrap Up

Talking Points from This Episode

  • Productivity is the main driver of long-term growth, but current GDP numbers are low.
  • Debt cycles have been used to make up for declining productivity and support asset prices.
  • Trade-offs between fiat monetary system and commodity-based system.
  • Federal Reserve should be agile in responding to data rather than predicting outcomes.

Guest Links:
Course Article:

Bob Elliott is the Co-Founder, CEO, and CIO of Unlimited, which uses machine learning to create index replication ETFs of 2&20 style alternative investments like hedge funds, venture capital and private equity.

Prior to founding Unlimited, Bob was a Senior Investment Executive at Bridgewater Associates where he served on the Investment Committee (G7) and created investment strategies across equities, fixed income, credit, exchange rates, and commodities, including many used in the flagship Pure Alpha fund. He also built and led Ray Dalio’s personal investment research team for nearly a decade. He’s the author of hundreds of Bridgewater’s widely read Daily Observations and directly counseled some of the world’s foremost policymakers and institutional investors on economic and investing issues.

Bob has also served as an advisor and executive at several startups including CircleUp, an investment company focused on early-stage consumer brands. There he revamped the investment strategy for the company’s $150mln venture funds leveraging big data approaches to improve decision making. He was also the co-founder of GiveWell, a startup charity evaluator which now directs more than $500mln in annual contributions.

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